Almost 25% of Iranian Businesses do not Pay Income Tax

Ali Askari, head of the National Tax Administration of Iran, announced on Wednesday that almost 25% of businesses in Iran do not pay income tax. Currently, petrochemical industries of Iran represent about 20 percent of gross domestic product (GDP).

“At the being time, Tax-To-GDP ratio in Iran is less than 7.6%. The average ratio of T/GDP is around 17% in world, while the same number in developing countries is 20%. In order to increase the revenues of government, we should revise tax policies and regulations in country.” Ali Askari remarked during a live television show. Tax-To-GDP ratio is the rate of tax collection against the national gross domestic product (GDP).

Askari declared that Iranian government should decrease its reliance on oil revenues. “In recent years, Iranian oil revenues have dropped significantly due to international embargoes on Iran’s economy. So I believe that the government must take advantage of income tax in the hope of making a reliable revenue source.”

“According to our studies, around 25% of small to medium businesses in Iran are not paying their income tax. In developed countries, governments reprimand companies escape from paying the necessary taxes. But in Iran, we have yet to take serious measures in this regard.” Ali Askari concluded.

It is worth mentioning that the Ministry of Finance and Economic Affairs is the government agency authorized to levy and collect taxes. In 2008, about 55% of the government’s budget came from oil and natural gas revenues, the rest from taxes and fees.